May 1, 2009
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Department of the Environment
- Parking cash-out can reduce employee parking demand by 20 percent or more in some environments.
- Latent demand for parking in San Francisco creates an environment where parking cash-out may not substantially reduce average parking occupancy in the long run.
AnalysisParking cash-out has shown the potential to substantially reduce parking demand, vehicle trips, and CO2 emissions where it has been tested. However, most research on the policy has been conducted in suburban environments. It is likely that the distinctive transportation environment in downtown San Francisco would not allow parking cash-out to have a significant impact on vehicle trips or emissions.
Approximately 41 percent of San Francisco workers drive to work, producing approximately 5.4 million VMT per day.
What we do now
The majority of employers in California provide free or reduced price parking for some employees as a fringe benefit. Although this practice is less common in San Francisco than in some locations, many San Francisco employers do subsidize parking.
What we could do
Under a parking cash-out requirement, employers are allowed to provide free parking to employees on the condition that they offer the cash value of the parking subsidy to any employee who does not drive to work. Certain employers are required to offer parking cash-out to their employees under state law; however, this law is poorly enforced.
Studies have repeatedly shown that parking cash-out can have major impact on employee mode choice. As documented in Richard W. Wilson and Donald C. Shoup’s “Parking Subsidies and Travel Choices: Assessing the Evidence,” a set of studies shows that there is a significant difference in travel mode choice among workers depending upon whether the employer or the employee pays for parking. These studies show that, on average, the implementation of employee-paid parking generated a 27 percent decrease in auto trips to work.
The cost to the public of requiring parking cash-out is low. Program enforcement might require the expense of new staff time, but otherwise it is free to the city. If we estimate that the city would require two full-time employees at a cost of $100,000 per employee to manage a parking cash-out program, the public cost would be $200,000.
For employers, the short-run cost of parking cash-out is the value of the benefit that must be paid to employees. In the long run, reduced employee parking demand due to the impact of the subsidy may allow employers to either buy, build, or lease fewer parking spaces, saving them more than the value of the cash benefit.
Carbon savings potential
As described above, eliminating parking subsidies has shown the potential to reduce vehicle trips by up to 27 percent. However, these findings reflect research that has been conducted mostly in suburban areas. The environment for parking cash-out in San Francisco may be quite different. In downtown San Francisco, for example, there are far more workers than parking spaces, and demand for free parking far exceeds the supply of off-street spaces. Work places that make parking available tend to ration it based on seniority.
These circumstances will tend to dilute the impact of parking cash-out in two ways: first, even if employees who currently park switch to transit or carpooling, other employees may turn down the benefit in order to take advantage of the newly available parking spaces. Second, if the total parking demand from a given employer decreases, in some cases their dedicated supply of parking may be leased to another employer, or rented as public off-street parking. While parking cash-out will certainly redistribute how parking is used in downtown San Francisco, it is likely that in the long-run most off-street spaces will continue to be used. In many parts of the city, and particularly downtown, the policy could have little net impact on VMT and CO2 emissions in the long run.
The potential impact of parking cash-out in San Francisco cannot be known without further study. It would almost certainly be far less than the impact of parking cash-out in a suburban setting. Given these constraints, we speculate that parking cash-out could offer San Francisco a maximum reduction of VMT reduction of 5 percent of work trips. If this policy were applied to all workers, it could still create a very large reduction in VMT: out of 5.4 million daily VMT for San Francisco workers, 274,000 would be eliminated. This amounts to an annual reduction of 1.4 million VMT, or 25,000 tons. Because of the constraints described above, this benefit should be considered the maximum benefit, and may not persist in the long term.